Copper futures in Shanghai advanced to near an eight-week high as tight supply pushed prices higher in the world’s biggest user of the metal.
The contract for July delivery on the Shanghai Futures Exchange rose as much as 0.6 percent to 47,920yuan ($7,665) a metric ton and traded at 47,750 yuan at 10:45 a.m. local time. The metal reached 48,160 yuan on April 28, the highest level for a most-active contract since March 10. The London Metal Exchange is closed for a holiday today.
Users in China have been paying the highest spot premium since 2011 to secure the metal, according to data compiled by Bloomberg. Copper for May delivery is about 700 yuan higher than the metal for June delivery, suggesting a tight availability in local market, according to Li Ye, an analyst at Shenyin & Wanguo Futures Co. in Shanghai.
“Shanghai copper futures are supported by limited physical supply as well as too much metal being tied up as collateral in financing agreements,” said Li. Chinese traders have locked up as much as 1 million tons as collateral to get credit for other investments, Goldman Sachs Group Inc. said on March 18.
Source: Bloomberg
